Savings Options

If you are looking for ways to save some of your free cash and still enjoy liquidity, continue reading this article, which will provide you with some hints for where to park the funds.

• Bonds

  This type of investment is classified as debt security. This means that you lend money to the government, a corporation or other financial entity, which in turn issue you a bond and pay you interest on it. The interest can be paid either periodically or when the maturity date of the bond is reached. When maturity comes you will also receive your principal.

• Money Market Fund

  This is a type of a mutual fund. The target investments of money market funds are short-term corporate and government debt securities that are of a high quality. The interest that you earn on money market funds is almost the same as that of CD's. It is of a variable character. The difference between the two is that you will not be penalized if you make an early withdrawal. Money market funds are regarded as highly secure.

• Certificates of Deposit (CD's)

  This type of investment option is better than a savings account in terms of interest rates. When you open an account you invest a fixed amount of money, which are tied in the CD for a particular time period. Additionally, you get a fixed amount of interest on the money placed in the CD. The FDIC provides a federal insurance on the placed money, which is limited up to $100,000.

  • Brokered CD's

    Instead of purchasing a CD directly from the issuing institution you can buy it from a broker. Such CD's come with higher interest rate. But, most of these CD's are callable. As a result the higher interest rate comes with a higher risk level. The bank is again the issuer of the CD even though it is sold through a broker.

  • Callable CD's

    Some of the CD's include a call clause in the agreement. This means that the issuer can terminate it when certain time has passed. On the other hand, you cannot do this. When interest rates decrease the common practice is for the bank to call the CDs. After this the bank will issue the CD again, but at an interest rate of a lower value.

  • Jumbo CD's

    This type of CD has a selling value of $50,000 or higher.

  • No-Penalty CD's

    If you have held the CD for a particular time period and it has the no-penalty feature you are allowed to sell it before maturity is reached. As a result you will not incur any penalties. This is done so that clients can purchase CD's that have new more attractive to them interest rate.

  • Variable Rate CD's

     If you have selected this type of a CD as a parking place for your money you will be able to enjoy flexibility. This means that you are allowed to make a limited number of withdrawals as well as some additional deposits.

  • Laddering CD's

    This is not a type of a CD, but instead a method of investing in it. It is practiced so that to overcome or take advantage of the fluctuations of interest rates.

• Interest-Bearing (NOW)

  NOW stands for negotiable order of withdrawal. This type of money parking place represents a checking account that brings interest to its holder.

• Christmas Club

  As the name implies, you are provided with the opportunity to allocate money for the upcoming holidays. You can also save for any other savings goal of a special character. However, if you decide to withdraw money earlier you will incur penalties.

• Checking Account

  This type of account is one of the most liquid ones, meaning that the holder can withdraw money from it whenever s/he needs by simply writing a check. The latter represents a written instruction to the bank that authorizes it to make a payment against the money deposited in the account.

• Passbook Savings Account

  The transactions that are executed through this account are recorded in a small book, which comes with this type of a savings account.

• Share Account

  This is a type of a savings account offered by credit unions.

• Share Account Certificates

  This is a type of a CD that is offered by credit unions.

• Share Draft Checking Account

  This is a type of a checking account that is offered by credit unions.

• Statement Savings Account

  The saver receives every month or quarter statements that present the transactions executed. The holder of the account is paid interest.

• Premium Savings Account

  This type of a savings account can come with tiered interest rates. The latter are usually linked to the higher balances.

• Student/senior accounts

  This type of a savings account is directed toward people under the age of 18. Another target group is people above the age of 60 or 65. Low or no minimum balance is required.

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